Cost and Revenue — Chapter Summary

Cost is the money expenditure incurred

Cost is the money expenditure incurred by the producer to purchase or hire factors of production and raw materials to produce goods and services.

Fixed cost is the expenditure on

Fixed cost is the expenditure on hiring or purchasing fixed factors or inputs that are compulsory and do not change with the amount of production.

Variable cost is the expenditure on

Variable cost is the expenditure on variable factors or inputs, such as labour, which can be changed with the level of production.

Explicit cost is the money expenditure

Explicit cost is the money expenditure incurred on both fixed and variable factors of production and raw materials.

Implicit cost is the cost

Implicit cost is the cost of self supplied factors, and its value is calculated on the basis of market value.